Contactless Payments Gain Traction in U.S., Higher Fees Worry Merchants

Over the past few months, the use of mobile payments and contactless credit and debit cards has increased dramatically. Why? Their use has soared largely due to the coronavirus crisis. Many consumers have been afraid that the virus can be contracted while touching surfaces, leading to an interest in contactless payment methods.

“Health experts say there is no clear evidence that COVID-19 is transmitted by cash or credit cards but retailers are putting health and safety first and have rolled out a variety of no-touch payment options in order to err on the side of caution,” commented Leon Buck, NRF vice president for government relations, banking and financial services.

Concerns Grow over Process Transaction Fees

According to The State of Retail Payments study by NRF, 67% of retailers now accept some form of no-touch payment. As more and more businesses feel the pressure to switch to contactless payment options, merchants have had growing concerns over the fees they are charged to process transactions. 

On average, banks charge merchants 2.5% when a credit card is used in-person. The charge remains the same whether it was inserted, tapped/waved or used via a mobile device. On the other hand, if the card was used online or over the phone, there is a higher fee of 2.8% (on average).

“The card industry should not take advantage of this situation to rake in extra fees merchants would not pay otherwise,” Buck said. “Card processing fees already drive up costs for retailers by far too much and ultimately increase prices paid by consumers.”

Contactless Payments are Here to Stay

While there are still many details that need to be sorted out, like processing fees, contactless payments are here to stay. Worldwide, 79% of merchants said they were using contactless payments, according to a 2020 Mastercard study. The key drivers being safety and cleanliness.

If your business is one of the many adopting new technologies to continue to evolve and grow, make sure you also consider your payment processing provider. Are they staying up to speed on consumer trends? Are you able to easily and safely offer customers convenient payment processing, like contactless payment methods?

If not, it might be time to use a resource like bestpaymentproviders.com to find a processor that understands your industry, your business type and your customers.

Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.